Can March Madness and a new collection of non-fungible tokens (NFTS) revive the fortunes of the sports betting company DraftKings (NASDAQ:DKNG) and DKNG shares?
The Boston-based company hopes so. On the eve of the college basketball tournament, DraftKings announced the launch of a new March Madness NFTs collection, which is the first of its kind for the companywho also specializes in fantasy sports.
Some cryptocurrency enthusiasts are even speculating that the new March Madness NFT Collection could serve as a bridge to Web 3.0 as it will allow users to place bets on basketball games while purchasing NFTs. For DraftKings, the move comes as its stock is down 75% in the past six months, including a 42% decline so far this year.
What happened with DKNG shares
In a statement, DraftKings said its March Madness NFTs represent “a new opportunity to gamify the fan experience.” The company announced that it will begin selling its College Hoops collection today, March 16. The first NFT, titled “Going Dancin'”, will sell for $10 and only 6,464 of the collectibles are available for purchase. Each of the NFTs will feature an image of a cartoon basketball.
Sports betting is really in the spotlight as March Madness, which runs from March 15 to April 4, kicks off. DraftKings already has a strong presence in sports betting, and some believe these NFTs can help it attract new users. This specific collection will give holders virtual credits to place bets or participate in fantastic contests.
It was the addition of virtual credits that caused some observers to praise DraftKings and call the company a bridge to Web 3.0. And while the College Hoops collection is the company’s first in-house NFT foray, DraftKings has been active in the NFT space for many months. Last summer, he launched a marketplace where he sells NFTs of Autograph, a company co-founded by Tom Brady. DraftKings says it plans more NFT collections for other sporting events, including the NBA playoffs and next year’s Super Bowl. Additionally, the company plans to release a fantasy NFT-based game ahead of the NFL season this fall.
why is it important
DraftKings has been working to grow its business and gain market share as more US states legalize sports betting. Nearly 30 US states have legalized sports betting, with 18 states legalizing online sports betting. DraftKings has done its best to capitalize on growing legalization. For example, DraftKings was one of the top advertisers during last month’s Super Bowl, offering $10 million in free bets and promotions to people who used its app to bet on the game.
However, the heavy marketing spend has raised concerns among analysts who cover DraftKings. Wall Street pros point to the fact that DraftKings continues to spend over $500 million on marketing, which is hurting its profitability.
DKNG’s stock is up 4% today following the announcement of its NFT collection. This is good news for shareholders.
The NCAA basketball tournament is a major sporting event and attracts a lot of media attention. DraftKings is clearly doing its best to capitalize on the event. However, longer term, the company’s stock should remain depressed until DraftKings charts a clear path to profitability. In today’s market, stocks of fast-growing, unprofitable companies seem to be out of favor with investors.
As of the date of publication, Joel Baglole had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.